Service parts supply chains have traditionally been neglected in many industrial environments. In many enterprises, materials requirements planning (MRP), enterprise resource planning (ERP), and other initiatives have been given higher priority, leaving the organization that handles service parts and returns as a mere cost center receiving little or no strategic planning support. This often leads to the development of one-time solutions that fail to consider many relevant issues and result in unavailability of service parts, delayed service fulfillment, and associated customer dissatisfaction. At the same time, especially as the Internet becomes more ubiquitous, customer care is increasingly seen as a differentiator among competitors, especially in industries in which customers rely significantly on the availability of their key capital assets.
A growing requirement for many enterprises is the ability to better manage the “reverse logistics” flow of service parts that are defective or are otherwise returned for replacement or repair. The flow of such aftermarket service parts may often provide a valuable source of re-salable service parts, potentially reducing the need to purchase or manufacture new service parts. Enterprises which effectively manage reverse logistics flows can reduce their costs significantly. Reverse logistics flow, however, is typically considered to involve a supply chain which is separate from the primary manufacturing and distribution supply chain of the enterprise and is often managed under sales and/or customer service organizations.
Service parts must typically be obtained from inventory since customers have an immediate need for the service parts and associated service. A primary goal in service planning is therefore maintaining adequate service parts inventory to satisfy customer demands as they occur. In multi-echelon inventory systems, the locations from which inventory is deployed may significantly impact the overall service level achieved. The rate of new product introduction and the need to support products for longer durations has resulted in an explosion in the number of service parts that must be stored. With physical storage space at a premium, an emerging issue is how to best make use of available space. For various reasons, forecasting of service parts demand and planning service parts inventories may be very difficult. However, the budget available to make such deployment decisions is often limited, making it desirable to identify an efficient and effective solution that avoids service parts excesses or needs. Previous techniques have been inadequate to satisfy the needs of many enterprises.